Sep.
11, 2003 - Chicago, once the only city with a convention center
large enough to host the nation's mega trade shows, is losing ground to
Sun Belt upstarts Las Vegas and Orlando.

Last year Chicago hosted only 19 of the top 200 trade shows, compared with as many as 30 in the early 1990s.

"Clearly,
there's a real problem," said trade show industry expert Heywood
Sanders, professor of public administration at the University of Texas
at San Antonio. "Chicago was able, in recent years, to recoup some
major event losses by attracting small- and medium-size events, but
that is a strategy other major cities can and are pursuing," said
Sanders.

Loss of big shows can be costly. The National Hardware
Show, for instance, the city's seventh-largest trade show, generated an
estimated $39 million in direct spending here last year. Next year, the
show's owner will move it to Las Vegas.

The show's longtime
sponsor, the American Hardware Manufacturers Association, which has
severed ties with the owner, is mounting an alternate show next year at
McCormick Place. The overall economic impact on Chicago remains to be
seen, and economic effects of the city's slippage in the big show arena
remain unmeasured.

What is clear is that large-show attendance
has slipped dramatically, to 688,354 in 2002, from 1.1 million in 1996,
the peak year among those reported by the city, which has kept such
data since 1994.

The Hardware Show's change of location turned
the spotlight on an escalating war in which rapidly growing Las Vegas
and Orlando have been bruising Chicago and other trade show venues
nationwide.

The two recreational playgrounds are expanding
their convention facilities at an aggressive clip and grabbing an
increasing share of the business generated by the 200 largest trade
shows in the nation, according to Tradeshow Week magazine.

In
1990, Las Vegas laid claim to just 14.9 percent of the exhibit space
used in the top 200 shows. But by 2002, it had corralled 26.1 percent,
and by 2005 it may snare 30 percent or more, according to a recent
report on the Las Vegas market issued by Merrill Lynch. Orlando went
from 1 percent of the market in 1990, to 9 percent in 2002.

Meanwhile,
cities with longer histories as convention and trade show magnets,
including Chicago, New York, Atlanta and Dallas, have seen their share
of big-show business shrink. Chicago dropped to 13.5 percent in 2002
from 18.8 percent in 1990, while in the same period New York dropped to
6.4 percent from 14.1 percent.

The Orange County Convention
Center in Orlando is opening a massive addition that nearly doubles its
exhibit space. The expansion brings the center to almost 2.1 million
square feet of exhibit space, within spitting distance of the 2.2
million at McCormick Place, the biggest venue in the U.S. and for many
years the only one that could house the 15 or so megashows mounted
annually.

In Las Vegas, the Mandalay Bay Convention Center
completed a huge expansion this year, giving it more than 1 million
square feet of exhibit space. This comes on the heels of a major
addition at the Las Vegas Convention Center last year, bringing that
publicly owned facility to nearly 2 million square feet. Add in the
Sands Expo and Convention Center, with 1.1 million square feet of
space, and Las Vegas boasts three of the 10 largest venues in the
nation.

"Las Vegas has become socially acceptable--gaming is
not the issue it was years ago," said Danielle Babilino, vice president
of hotel sales at Mandalay Bay Convention Center. "Las Vegas has become
multidimensional, whether it's shopping, spas, dining or entertainment.

"It's comparable to any other major city ... except maybe not as
expensive," she said. "And distances are short, the weather conditions
are great and it's easy to get in and out of the city."

Orlando
makes some of the same sales pitches, as well as touting a low-cost and
flexible labor force at the facility, which is not unionized.

Chicago
convention officials acknowledge the competitive landscape has shifted
significantly, but argue that Chicago has fared well, in part due to
specific counter-punches.

The city has been fighting back on a
number of fronts: chasing small- to mid-size slices of business;
pressuring hoteliers to price competitively; launching dedicated buses
to ferry conventioneers from downtown to McCormick Place; and
extracting concessions from the labor unions.

For starters,
Chicago has remained a powerhouse by attracting events such as medical
conventions, which may use relatively modest amounts of exhibit space
but draw huge numbers of big spenders to the city, said Chicago
Convention and Tourism Bureau officials.

"Attendance and economic impact to the city is pretty phenomenal," said Deborah Sexton, president of the bureau.

Bureau
officials note that Chicago drew 6.9 million U.S. business travelers
last year, more than any other city in the nation, according to a study
by D.K. Shifflet & Associates. This brought an estimated $6 billion
in direct spending to the city.

Convention officials also have put the squeeze on hotels, urging them to keep prices attractive for conventioneers.

For
instance, to aid the American Hardware Manufacturers Association when
it mounts its rival show in Chicago next spring, the bureau prevailed
upon local hoteliers to meet or beat the rates paid by show attendees
this year.

The
city also hopes to attract fresh business to McCormick Place during the
peak spring and fall seasons after completion in 2007 of a $1.14
billion expansion. The new west building will include 500,000 square
feet of exhibit space and about 200,000 square feet of meeting and
event space.

In September 1998, the city won union concessions
on work rules and costly overtime practices at McCormick Place, and
officials expressed confidence then that the agreement would help
ensure the city's place as the nation's trade show capital.

But now, more changes are needed if the city is to remain competitive, Reilly said.

"Labor is unquestionably an issue," he said.

Convention
center construction generally is financed with visitor-based taxes, and
Orlando and Las Vegas, with the ability to tax more than 100,000 hotel
rooms each, have an enormous leg up on most other cities.

"If you're competing by adding space, Orlando and Las Vegas can do it faster," noted Sanders, of the University of Texas.

And both cities are snagging business from elsewhere.

After
holding its annual expo in Dallas for 26 years, the Promotional
Products Association International moved the event to Las Vegas this
year.

Show attendance had been dwindling, "and we wanted a more
exciting destination that would draw more attendees from across the
country," said Tina Filipski, a spokeswoman. The Vegas show drew 20,000
attendees, up from fewer than 15,000 the year before.

In the
case of the National Hardware Show, "the marketplace is saying it needs
something fresh and new," said Dennis MacDonald, senior vice president
at Reed Exhibitions, the trade-show management firm that owns the
National Hardware Show.

Looking forward, it's clear that the days when Chicago could dominate by the sheer size of McCormick Place are over.

"Competition
now will take place on a variety of other related
dimensions--attractiveness of destination, air service and costs,
including space rental and labor," said Sanders.

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